Currency markets got off to a steady start to the week, boosted by trade optimism and looming interest rate meetings for four of the G7’s five central banks.
The Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of Canada will all make their latest monetary policy decisions before the week is out. Markets are expecting at least two of those meetings to result in cuts, with the Federal Reserve’s decision in particular drawing close interest from across the world.
Neither that key decision nor the ongoing government shutdown could stop President Trump from jetting off to Asia this week. The president is in Japan first, where he will meet with new prime minister Sanae Takaichi before moving on to his ultimate goal of China.
Of course, the other main theme of this week is set to be trade. News that the US and China had agreed to the framework of a deal ahead of the meeting between Trump and Xi Jinping added to the confident mood on Monday. Any slip up in those high-stakes discussions could prove destabilising to the constructive tone that marked the start to this week.
Argentina’s peso was arguably the world’s best performing currency on Monday, after a crucial victory for Javier Milei’s La Libertad Avanza party in the midterm elections. The peso strengthened by almost ten per cent against the US dollar, having only recently seemed destined for a currency devaluation.
Yesterday was a worse day for the Japanese yen, which came under pressure ahead of Thursday’s interest rate decision. Currency markets expect rates the Bank of Japan to announce another hold. More interesting could be their commentary on the policy implications of the new prime minister.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract or call your account manager on 020 7898 0541 to get started.
